Month: March 2014

Happy Ag Day! In honor of Ag DayThe Farm Bill just keeps bringing changes and more options to the table for farmers and ranchers. One of those changes, which brings more options, is through the Farm Storage and Facility Loan Program.

No changes have been made to the Program as described above. The Program continues to provide low-interest loans for building or upgrading eligible facilities for eligible commodities.

The changes that have been made expand the Program. The expansion is for fruit and vegetable producers. For the first time, the Program will cover the structure and equipment required to get fruits and vegetables washed, treated and packed. Thus, for fruit and vegetable producers, the following are eligible for Program loans:

Boxing

Baggers

Brush Polishers

Bulk Bin Tippers

Case Palletizers

Cold Dip Tanks

Fruit/Vegetable Conveyors

Food Safety-Related Equipment

Drying Tunnels

Dumpers

Fruit/Vegetable Hoppers

Hydrolifts

Hydrocoolers

Ice Machine

Quality Graders

Roller Creepfeeders

Roller Spray Units

Sealants

Sizers

Sorting Bins/Tables

Washers

Waxers

Weight Graders

Note that all drying and handling equipment must be permanently affixed. In other words, drying and handling equipment cannot be mobile or easily moveable.

Do I need collateral or security for the loan?

Changes have also been made to the security requirement for a Program loan. Program loans up to $100,000 now can be secured via a promissory note only and do not require collateral. For loans over $100,000, collateral is required.

What is the maximum loan amount, loan term etc.?

The maximum is $500,000 per loan. The loan can only be 85% of the cost of the eligible facility. The loan term can be 7, 10, or 12 years dependent upon the amount of the loan. Also note that the loan will not be distributed until the facility has been built and inspected, with an exception for one qualify partial disbursement.

What about insurance; do I need that?

If you are a fruit and vegetable producer, you may annually request a waiver of the multi-peril crop insurance or the Non-Insured Crop Assistance Program requirement.

The Farm Service Agency recently updated their Fact Sheet about the Program. Keep in mind that the Program still provides loans for grain bins, hay barns and the like — the Program has merely expanded to include other items that are of particular interest to fruit and vegetable producers.

Many beginning farmers, understandably and justifiably, are looking for niche or small markets, rather than running a big crop or livestock operation. These niche operations may also offer other goods for sale using products from the farm, such as jellies, breads, or pies.

Are there any laws regarding sales of products such as jellies, breads, and pies? Yes there are. These laws, known as cottage food laws, address such products. Cottage foods are those foods which are potentially non-hazardous and therefore do not present the same food safety risks as other processed foods. In other words, cottage foods may be made at home or in a non-commercial kitchen. Simply, a licensed, inspected kitchen is not required for the selling of cottage foods.

Nebraska permits cottage food operations via statute. This post discusses the highlights of the cottage food laws but, as always, contact us if you have questions.

Where can I sell?

Nebraska permits cottage foods to be sold only at farmers’ markets. Thus, while the foods can be prepared in a private kitchen, the products must be sold at a farmers’ market. Further, a farmer may set up a produce stand that sells only whole, uncut fruits and vegetables.

Nebraska law places no limits on the amount of money that can be made from selling cottage foods.

Conclusion?

Nebraska law about cottage food is both expansive and limited. While cottage foods can only be sold at a farmers’ market, many potential items may be sold as a cottage food at an unlimited profit. If you are considering selling cottage foods in Nebraska, feel free to contact us with any questions you may have — we’re here to help!

As you may know, flexible leases are gaining in popularity. Flexible leases are just that — more flexible than your straightforward cash or share lease. There are various iterations of the flexible lease, from a bushel rental to bonus provisions based upon price and/or yield but regardless, there are a few more moving parts in these leases. What does that mean?

First, like all leases, the lease must comply with the statute of frauds. You also need a meeting of the minds. All the essential elements of a lease must be present. That means while the rental price is not determined until after the growing season, a formula or method to determine the price must be in the lease contract to satisfy the essential elements. But what else?

Make sure you understand how the numbers work in the lease. Run various scenarios to truly understand the implications of the rental price. Also explore any impact, positive or negative, on the use of government programs. For example, you’ll want to ensure whether there are any USDA payment limitation implications from the lease.

Specifically from a landowner perspective, other considerations include whether the lease will subject you to income tax complications. For example, will you be able to defer income for a year? Will you be subject to self employment tax? Alternatively, do you need to build a base for Social Security payments?

If you are a beginning farmer in Nebraska, we’re happy to discuss any flexible lease arrangement you may have in mind and the potential issues that may arise. Feel free to contact us at any time!

Meta

Follow Blog via Email

Enter your email address to follow this blog and receive notifications of new posts by email.

Please Note:

This website and blog is for educational and informational purposes only. Please contact legal counsel in your state (or contact us to determine if you qualify for Legal Aid of Nebraska's services) to discuss your specific questions.

Recent Posts

About us

Legal Aid of Nebraska's Farm and Ranch Project is the oldest continuously operating farm legal services program in the United States. Due to a grant from the USDA's National Institute of Food and Agriculture Beginning Farmer and Rancher Development Program, Legal Aid of Nebraska has the opportunity to further its range of services to Nebraska and South Dakota farmers and ranchers.